The recent revelation that Wal-Mart plans to pour $2 billion into E-Commerce over the next two years brought back memories of past digital transformation intersections; both those roads taken, and perhaps more infamously, those not. Wal-Mart also reported, not coincidently, that profits were trending downward against flat sales expected in 2016. The market responded with a 9% drop in its stock price, effectively wiping out $20 billion in market cap.

“There’s a perception in the world that Wal-Mart is playing catch-up to Target and Amazon, especially in e-commerce innovation,” said Jim Davidson, head of research at Bronto, a marketing company.

Priorities for Wal-Mart’s new spending include continued work on fulfillment centers, with four new facilities slated to open in southern California, Florida and Texas in an effort to bridge its digital and physical operations. Wal-Mart also plans to improve its mobile app, in a broader push to work on customer experience, and to invest in Chinese online commerce company Yihaodian acquired this past June.

“People in the technology industry have been predicting that brick-and-mortar-based businesses like Wal-Mart are going to end up really struggling, and I think that that’s actually now coming to the fore in this powerful way today,” Founders Fund partner Geoff Lewis said.

Former Office Depot CEO Steve Odland noted that Amazon is growing 77% in contrast to Wal-Mart’s anticipated flat sales performance. “That story tells it all. They’re getting killed by the Internet and they don’t have any choice but to invest this billion dollars into trying to create their e-commerce business,” he told Squawk Alley.

After years of investing in driving efficiencies around inventory optimization, supply chain management and logistics, the focus is changing.” At this point, the technology investment that they need is one to drive growth, to drive sales growth with consumers, and they are sort of massively handicapped on that score,” said Lewis. The company now must contend not just with Amazon, he said, but also emerging private e-commerce firms like Wish — which Founders Fund is invested in — and Jet.com.

E-Commerce and the Kodak Moment

As noted earlier, what is being touted as the “eCommerce tipping point” is really just another chapter in the cautionary tale known as the “Kodak Moment”. Once used to describe the capturing of a memorable lifetime moment on film, the phrase now refers to a B-school case study that details Kodak’s failure as a company to recognize that digital photography, disruptive technologies and related business transformations represented the future.

We could very easily argue that another such eCommerce tipping point came when the once mighty Blockbuster Video failed to recognize the consumer’s distaste for late fees and desire to shop for content online – first in the form of DVD deliveries and eventually as subscription-based streaming services. Blockbuster management famously had the opportunity to acquire Netflix in 2000 for $50 million and begin adopting a new business model, but did not – Blockbuster is gone and Netflix is now worth $43 BILLION!

The pundits tend to get hung up on the “disruptive” technologies angle when the real driver remains the customer – their response to new platforms and channels as well as their preferred ways of interacting with a brand or business. Leadership that fails to trend spot, innovate and transform is doomed to repeat the mistakes of Kodak, Blockbuster, RIM and many others.

Will Wal-Mart experience this same fate? Is the planned investment of $2 billion in eCommerce too little, too late? To both, we would have to say “no”. It isn’t as if they just realized that they can and should sell online. As recently as 2014, Wal-Mart was listed as the Number 4 online retailer with $12.2 billion in revenue. The issue is that said revenue number represented only 2.5% of total sales and Wal-Mart has had a history of being reactive vs. proactive in this space.

For example, the realization that 70% of traffic to Walmart.com came from mobile devices during the 2014 holiday period sparked plans for a greater push into mobile in coming years – they should have understood the importance and acted on the promise of mobile eCommerce as early as 2011. They aren’t doomed but they are behind the curve.

The Importance of E-Commerce and Trends to Expect in 2016

If you listen to the founder of DBG, who has built game-changing digital businesses on behalf of Panasonic, Royal Caribbean Cruises, TracFone Wireless, Sony Music and more, eCommerce has been mission-critical for the past 20 years.

Simply put, you can’t put the genie back into the bottle. In fact, the proliferation of Internet-enabled devices (IoT) and related communications / commerce capabilities will allow said genie to explore places never before imagined. Consumers and businesses, alike, have had more than just a taste of instant gratification and they have an insatiable craving for more. Why would I want to go to a physical store when access to everything I might want or need sits in the palm of my hand?

Or does it? To date, facilitating instant gratification with a physical product is only in an experimental phase – Amazon drones, 3D printers, and more traditional forms of same-day delivery. As eBay concluded after recently shutting down its eBay Now service that was offered in limited markets, “same-day delivery makes more sense for items such as diapers or groceries, which aren’t core eBay categories like collectibles and used items”. Same-day delivery is an amazingly complex challenge but one that Wal-Mart might be best suited to tackle thanks to its product offerings and expertise in supply chain.

Global eCommerce represents a very real opportunity – and threat.

From brand awareness and customer acquisition perspectives, data-driven and intent-based retargeting will continue to deliver results. According to The National Center for Biotechnology Information, the average adult attention span is only 8.25 seconds. As a result, repetitively targeting the right audience member in creative ways will satisfy the Rule of 7 – number of touches required to remember a brand or sell on a B2B basis. In fact, CTRs associated with retargeting are 3-10X that of broader digital advertising.

More mobile, please! Not only will mobile continue to increase its share of search and shopping, but adoption of responsive design and innovations in merchandising (e.g. upload a picture of yourself from your phone and see how you look in those glasses, how your car looks with those rims or your living room walls look with that paint) will improve conversion rates, thus increasing total sales attributed to mobile commerce.

Speaking of mobile, omnichannel retailers and direct-to-consumer (DTC) manufacturers will be able to map, learn from and capitalize on the true multichannel / multi-device / multi-site customer journey courtesy of enhancements to cross-channel customer experience, communications and data analytics solutions. The expanded picture and understanding of the consumer will lead to greater share of mind, heart and wallet.

From a talent perspective, successful eCommerce players in 2016 will hire or otherwise engage specialists in consumer interaction innovation and revenue growth. Finding new ways to engage customers (acquisition, retention and lifetime value extension) as well as identifying new monetization methods are both of paramount importance to the overall sustainability and success of your eCommerce or omnichannel business.

Avoiding that Kodak Moment and building a wildly successful and sustainable eCommerce or omnichannel business requires vision, fortitude and expertise. Are you ready to grow your business? Contact us for a complimentary consultation.